A Record Number of Americans Are Spending More Than $1,000 on Monthly Car Payments | Carscoops

      Recent data reveals that record-high car payments and extended loan terms are altering the demographics of new vehicle affordability, causing lower-income buyers to disappear from dealerships.

      As of a recent report, one in five car buyers is now spending $1,000 or more each month. Longer loan durations and larger finance amounts are obscuring the real stress of affordability. This shift has led wealthier purchasers to dominate the market, while other buyers have largely exited.

      It is widely acknowledged that vehicle prices, both new and used, continue to rise significantly, prompting discussions among automakers and lawmakers alike. New findings show that 20.3 percent of all financed new vehicle purchases in Q4 2025 featured monthly payments of $1,000 or more, marking the highest percentage ever recorded. This is an increase from 19.1 percent in Q3 2025 and 18.9 percent the previous year, highlighting a year characterized by persistent high prices, elevated interest rates, and consumers pushing their budgets to secure new vehicles.

      Ivan Drury, Edmunds' director of insights, noted, "Confronted with consistently high vehicle prices and borrowing costs, many consumers have had to adapt by financing larger amounts, extending loan terms, and increasingly taking on monthly payments of four figures." He emphasized that the record numbers we're witnessing indicate the financial difficulties many buyers have experienced throughout the year.

      Notably, the pressure extends beyond new cars; used vehicle buyers have also reached a new high, with 6.3 percent agreeing to $1,000-plus monthly payments, fueled by rising used prices and average double-digit interest rates of 10.6 percent in Q4. The statistics behind these payments tell a more detailed story.

      The average monthly payment for a financed new vehicle now stands at a record $772, while the average amount financed has risen to $43,759, another historic peak. Although interest rates have seen a slight reduction, buyers are still borrowing more money than ever, and they are doing so over longer periods.

      Longer loan terms are essentially keeping sales viable. In Q4, over 20.8 percent of buyers of financed new cars opted for loan terms of 84 months (7 years) or longer. While this figure represents a decrease compared to Q3 of 2025, it still exceeds the levels seen prior to the pandemic. This marks a notable increase from Q4 of 2024, when 84-month loans constituted just 17.9 percent of the market. Extended financing is becoming increasingly common, which poses negative implications for average consumers.

      The average Annual Percentage Rate (APR) for new vehicle loans reached 6.7 percent, a slight decline from earlier in the year but still near historical highs. Zero-percent financing offers remain rare, applicable to just 3.1 percent of new vehicle loans during this quarter. This is a slight increase from 2.4 percent a year ago, suggesting a minor resurgence of promotional offers. Such deals can potentially hinder consumers’ ability to accumulate long-term wealth, yet many are still committing to these payments.

      A substantial divide is emerging in car sales. According to Cox Automotive, new car sales have risen by 45 percent since 2019 among households earning $150,000 or more, while buyers with incomes below $75,000 have largely withdrawn from the new car market. This trend contributes to the noticeable disparity in vehicle offerings.

      Many automakers are targeting affluent consumers with larger, more luxurious vehicles, including trucks, SUVs, and high-end trims that justify their higher prices through size, technology, and perceived durability. Currently, there seems to be no indication of significant industry shifts on the horizon. As always, it’s vital for buyers to carefully assess their costs before committing to four-figure payments (not to mention insurance) as part of any car purchase arrangement.